NEM

What is NEM?

NEM launched in 2015 and is a payment infrastructure system. NEM has new blockchain features and introduced a new kind of consensus called POI (Proof of Importance). To prevent confusion in this article: NEM is the name of the project and XEM is currency/token/coin used in the NEM network.

POI is based on POS (Proof of Stake) but checks more things than just the balance of the account. These checks are based on:

How much XEM you have spent the last 30 days

Amount of vested XEM in your wallet

Accounts that are part of active cluster nodes have a slight advantage

With normal POS, you are rewarded based on the amount of coins in your wallet. Since holding coins gives you a higher stake (and thus higher reward) spending becomes a smaller priority. With POI, this criticism of POS is taken care of.

POI also looks at the amount of vested XEM in your account. Every 24 hours, 10% of your unvested XEM will become vested. When you send XEM, both vested and unvested XEM will be sent. Vested XEM is used to build trust.

NEM also uses supernodes to power the network. Everyone can setup a supernode using the following XEM supernode instructions. But you need at least 3 million XEM to become a supernode.

Mining algorithm

NEM is using a POI (Proof of Importance) algorithm based on SHA-3. You can’t mine XEM tokens the conventional way. Once you have enough vested XEM (at least 10.000), you can mine XEM through local harvesting or delegated harvesting. So in this case, mining is called harvesting.

Harvesting is the process where a XEM node will calculate certain blocks and add them to the blockchain or harvesting the fees in the process.

Your importance score if very important. This is a part of the POI algorithm and is based on the amount of transactions you make. You get rewarded more importance for making more transactions.

You can earn more XEM by running a XEM supernode. But to make a XEM supernode you need 3 million XEM tokens. 140,000 XEM is paid every day divided by the total number of supernodes.

What can you do with NEM?

You can use NEM to utilize your own blockchain without building it from scratch. You can do this by using XEM api’s. Most people use NEM for harvesting and trading on exchanges. It’s yet to see what the future holds for NEM when real world applications start to use the network.